Kyle Orton’s contract was originally a 3-year-contract at $3.5 million per season. The Cowboys played with the money, agreeing to give him about $5.9 million the first year – $5 million of which was a signing bonus. They paid him only $1.35 million last year. And then he was going to get the other $3.25 million this year.
Essentially, it was a 3 year deal with 2/3rds of the money paid in the first 2 years and the remaining 3rd paid in the last year.
In addition to the Original Structure, which pushed some of the Salary of the first two years into the Salary CAP of this coming season, the Cowboys restructured Orton’s deal twice to get more room under the Salary CAP.
In November 2012 the Cowboys asked Orton to restructure his deal because they were out of Salary CAP space, and they needed to sign some new defensive players due to injury. In what was a pure paperwork accounting ploy, they extended his contract to 5 years, but the last two years were automatically voided after this coming season.
Technically, the Cowboys added two more years of salary at $3.5 million per year – for a total 5 year deal at $17.5 million. But since the last two years automatically voided after the coming season, it was really still a 3 year deal at $10.5 million.
So, Orton was still on a 3 year deal, but for Salary CAP purposes, his bonus, which had been charged to the Salary CAP at $1.667 million per year, was now spread over 5 years at $1 million per year. The Cowboys used the extra $667K to sign some defensive players for Rob Ryan’s defense. (They did the same deal with Doug Free in order to spread his bonuses over 5 years instead of the 3 years remaining on his 2011 contract – with two voidable years after next season at $8 million per season.)
In the original deal, Orton agreed to be paid $3.5 million per year. He collected $7.25 million over two years, which is in line with his original deal. The purpose of how the Cowboys structured his contract was to help them on the Salary CAP because, as we all know, they were really having Salary CAP issues the last two seasons.
Last season, the Cowboys once again asked Orton to take “Bonus” money up front in lieu of salary, and spread the savings over 4 years remaining on his bogus five-year-deal.
The supposed $3.4 million Orton might have had to pay back was ALL money he allowed the Cowboys to push into later years for Salary CAP reasons. But from an original agreement perspective, Orton got paid 2/3rds of the money for 2/3rds of his original 3 year deal.
It would have been unjust for the Cowboys to attempt to collect that Bonus money back, since the only reason it has not already been charged to the CAP was to allow the Cowboys to overspend the last two years. The Cowboys did the right thing by dropping what was essentially a bogus claim to getting money paid back to them. Technically, they had a legal right to it, but morally, it wasn’t right.
THIS IS REALLY IMPORTANT:
If the Cowboys had pursued getting paid back the money, when the only reason they had a legal right to it was because the player agreed to help them out on the salary CAP by the structure of the contract, it would have crippled them in all their future negotiations with other players on restructuring contracts to get Salary CAP relief.
Based on the Orton example, other players and their agents would have NO REASON to agree to restructure their salaries into bonuses spread out over several seasons. If players believed the Cowboys would pull a bait and switch by trying to get paid back for money the players already got paid, they would have to protect themselves from the Cowboys by keeping the money as salary to prohibit the Cowboys having a legal right to try to collect the money. Players would refuse to restructure.
That would severely hurt the Cowboys, and cause them not to have the ability to play around with the Salary CAP in the future. While sports reporters are mentally retarded when it comes to understanding math and accounting, you can be very sure that agents and players would notice that the Cowboys didn’t treat Orton fairly.
Free Agents would refuse to sign with the Cowboys. Rookies would insist on higher salaries and lower signing bonuses. Drafted players would refuse to resign with them after their rookie contracts expired. And the Cowboys would become pariahs among NFL player agents. In short, it would have destroyed the Cowboys if they went after Orton’s money – money that did not morally belong to them.
Stephen Jones and the Cowboys front office were smart enough not to do that.
The “stand-off” never became adversarial between the Cowboys and Orton. Simply put, the Cowboys never intended to go after that money because it would have hurt them more than Orton. They were just trying to get Orton to play this year because they genuinely believed the team would be better with him backing up Romo. Orton genuinely wanted to retire.
The “stand-off” was a media generated myth. And the supposed leverage the Cowboys had? Also a myth. The only reason it was reported that way is because most sports reporters are idiots when it comes to understanding contracts.
Orton DID NOT screw over the Cowboys. He was paid 2/3rds of his contract value for 2/3rds of the work. Players get cut every year prior to the end of their contracts. And players retire every year prior to the end of their contracts.
Orton did nothing wrong by retiring a year early. And the Cowboys did nothing wrong by giving him time to change his mind. This was an amicable parting of the ways, and you shouldn’t believe that either the Cowboys or Orton did anything wrong. Both parties handled themselves properly.
When Orton informed the Cowboys of his intentions to retire back in March, it allowed them to go out and sign two backup quarterbacks with NFL starting experience – Brandon Weeden and Caleb Hanie. The Cowboys will actually save money on the salary CAP by Orton’s retirement, since the price of Weeden and Hanie combined is less than the cost of Orton. Orton treated the Cowboys respectfully. He forfeits his claim on the final 1/3 of the money and the Cowboys don’t owe him anything more. He owes them nothing either.
Good Luck to Orton in his post-NFL life, and Go Cowboys.